Investors with an interest in REIT and Equity Trust - Other stocks have likely encountered both Empire State Realty Trust (ESRT - Free Report) and Healthpeak (PEAK - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Empire State Realty Trust has a Zacks Rank of #2 (Buy), while Healthpeak has a Zacks Rank of #3 (Hold). This means that ESRT's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
ESRT currently has a forward P/E ratio of 15.01, while PEAK has a forward P/E of 19.91. We also note that ESRT has a PEG ratio of 3.75. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. PEAK currently has a PEG ratio of 6.79.
Another notable valuation metric for ESRT is its P/B ratio of 1.26. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, PEAK has a P/B of 2.71.
These are just a few of the metrics contributing to ESRT's Value grade of B and PEAK's Value grade of D.
ESRT has seen stronger estimate revision activity and sports more attractive valuation metrics than PEAK, so it seems like value investors will conclude that ESRT is the superior option right now.